Bitcoin rallied above $ 50,000 again late Monday night and continued to rally in early Tuesday as cryptocurrencies joined the broader market rally. The world’s largest cryptocurrency has surpassed $ 51,000, but is still about 25% below all-time highs reached early last month.
Bitcoin experienced a sharp slump over the weekend, dropping 20% to $ 42,000 early Saturday. It quickly recovered to $ 49,000 before continuing its decline earlier in the week. The sharp drop comes after a tough week for stocks under pressure from fears over the Omicron coronavirus variant and hawkish comments from Federal Reserve Chairman Jerome Powell. Bitcoin’s resurgence over the past two days has also coincided with an upward move in the stock market – further evidence of the asset’s growing correlation with stocks.
“Although bitcoin prices jumped to around $ 51,000 on Tuesday, the sharp fluctuations underscore our view that digital assets are still problematic,” said UBS chief investment officer Mark Hefele. “But this does not mean that this area is devoid of prospects for investors. We see opportunities in distributed ledger technology, not in the crypto tokens themselves, ”he added.
Other Markets Except Bitcoin
Stocks rebounded on Monday, with the Dow surging 646 points as investors greeted comments from US medical advisor Anthony Fauci and fresh data suggesting Omicron’s impact may not be as severe as anticipated. Analysts are increasingly supporting the view that the outbreak in the short term will hinder the markets, but will not hinder their growth in the future.
“Given the current information, we expect the omicron to merge with the current delta wave that the global economy is already experiencing,” Mark Hafele, chief investment officer at UBS Global Wealth Management, said Tuesday. “In this scenario, governments impose partial restrictions to restrict the spread of the virus, but do not enforce a full block.”
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Mihir Kapadia, CEO of Sun Global Investments, said the emergence of Omicron could even dampen the economic impact of COVID-19.
“If an option causes little or no hospitalization, rapid transmission could also mean the pandemic could be brought to an end,” Kapadia said. “In this scenario, we could perhaps expect 2022 to be a year of incredible returns (to peaks). But, as indicated, at the moment there is nothing unambiguous, and there are no historical precedents for comparison. “
In Europe, stocks also showed strong performance at the start of Tuesday. The pan-continental Euro Stoxx 600 added 1.8%, the Frankfurt DAX added 2% and the London FTSE 100 added 1.1%. Asian stocks rose on support from China’s central bank to ease monetary policy. The People’s Bank of China said on Monday it will free up $ 188 billion in long-term liquidity to fuel economic growth. The Shanghai Composite Index climbed 0.2%. Tokyo’s Nikkei jumped 1.9% and Hong Kong’s Hang Seng jumped 2.7%.
Oil prices continued to climb after rising nearly 5% on Monday, as the dying of Omicron concerns raised hopes that global fuel demand will not be hit as badly as previously expected. The delay in the return of Iranian oil also appears to be supporting prices. Brent crude oil futures rose 2.6% to $ 74.98 a barrel, while West Texas Intermediate crude oil futures rose 3% to $ 71.60.
Meanwhile, the dollar fell 0.13% to 96.20 and the 10-year Treasury yield rose 1 basis point to 1.44%.
“I don’t think this is the end of a bullish cycle, and I believe that this sell-off has given weight to the theory of lengthening the cycle, according to which this bull market could last until 2022, contrary to the expectations of many analysts to form a top in 2021,” said Marcus Sotiriou , a sales trader for UK digital asset broker GlobalBlock.
